3SOF

I don't have time to give specific reasons for the stocks I'm about to buy today. I wish to be full invested for the end of the year rally that will probably take the S&P500 and the Nasdaq to new highs.

I believe the chart below clearly says I must buy TRAD at today's open. More specific reasons will be added to this recommendation at the daily updates to come.

QuoteI don't have time to give specific reasons for the stocks I'm about to buy today

LOL sometimes silence is golden, just let the stock do the talking for you

TRAD has sort of a rounding bottom pattern (not technically correct according to the rule book but the sentiment is the same a long term bearish trend moving to bullish) is above some old historical resistance (Red line) and if continuation is in play should shape up to re-visit old highs (Blue line) and breakout. This pattern is a weekly chart long term so the breakout shapes up over time (i.e. not)t a few days. The sector is strong right now as well which makes TRAD a great play in prospect.

Thanks for that beautiful chart Aussie 

Since you already made a nice technical analysis, I'll talk a bit about the fundamentals of Tradestation.

In the first place, I will, in the near future, open an account with them, because I've seen their demos and the service looks fantastic to me (it could eliminate my need to watch the market near the closing bell).

The market cap is just about $500M, while E*Trade's is $7.07B (and E*Trade is undervalued) and Schwab's is about $20B !

Let me give you some highlights from their latest quarterly earnings report:

1) «PLANTATION, Fla., Oct 26, 2005 /PRNewswire-FirstCall via COMTEX/ -- TradeStation Group, Inc. (TRAD) today reported record quarterly net revenues of $24.1 million, record quarterly income before income taxes of $8.9 million, record daily average revenue trades (DARTs) of over 41,000, and record total brokerage accounts of over 22,000.»

2) «TradeStation Group's 2005 third quarter net income of $5.3 million, or 12 cents per share (diluted), was a 188% increase over 2004 third quarter net income of $1.8 million, or 4 cents per share (diluted).»

If they continue to earn 12 cents a share, without any growth (I think they will grow faster and faster), they would make 48 cents in a year. The stock price is $11.65 now, so the P/E Ratio is 24. Earnings growth is 188% and the multiple is 24. This means that, by this simple metric (comparison between the growth rate and the P/E Ratio), the stock is undervalued.

3) «The company's 2005 third quarter operating margin of 35% was a 110% increase from its 2004 third quarter operating margin of 16%, and an 11% sequential increase from its 2005 second quarter operating margin of 31%.

The company's 2005 third quarter net revenues of $24.1 million were a 40% increase over 2004 third quarter net revenues of $17.2 million. »

4) «While the average TradeStation account traded 480 times per year, or 40 times per month, the average Ameritrade and E-Trade account traded about 10 times per year, or less than one time per month. Also, TradeStation's average assets per equities account of $85,000 was substantially higher than the average assets per account of Ameritrade and E-Trade.»

Their costumers are much better than those of the competition.

I have a friend who owns a small brokerage house here in Portugal. He says one good costumer may be worth 100 or even 1,000 "bad costumers". Just one client of him, who was an active day trader, accounted for more than 50% of his revenue 

For the entire year, TRAD expects this: «The company also announced that its Earnings Per Share (Diluted) Business Outlook for the 2005 year is now an estimated range of 43 to 44 cents.»

So, for 2006 probably earnings are going to be higher and the stock is way undervalued at this point.

On their profile it says this:

«TradeStation Group, Inc. (TRAD), through its operating subsidiary, TradeStation Securities, Inc., offers the TradeStation platform to institutional, professional and serious, active individual traders. TradeStation is an electronic trading platform that offers state-of-the-art direct-access order execution and enables clients to design, test, monitor and automate their own custom trading strategies. In February 2005, TradeStation was named Best Stock Brokerage and Best Futures Brokerage and, for the third year in a row, Best Direct-Access Stock Broker, Best Direct-Access Futures Broker, Best Professional Platform and Best Institutional Platform, in Technical Analysis of Stocks and Commodities magazine. The trading platform currently offers streaming real-time Equities, Options, Futures and Forex market data.

TradeStation Securities, Inc. (Member NASD, NYSE, SIPC, NSCC, DTC, OCC & NFA) is a licensed securities broker-dealer and a registered futures commission merchant, and also a member of the American Stock Exchange, Archipelago Exchange, Boston Options Exchange, Chicago Board Options Exchange, Eurex US, International Securities Exchange and Philadelphia Stock Exchange. The company's other operating subsidiary, TradeStation Technologies, Inc., develops and offers strategy trading software tools and subscription services, and hosts the company's annual users conference.»

One day, possibly, many of us will be professional traders, and we'll want an account with Tradestation, I can guarantee you that. It has the lowest commissions and the best service.

Just buy and hold, I think this may be a multi bagger if one has the time.

I think I've made my fundamental point on TRAD at the last update.

Looking at the all history chart we see that TRAD may face resistance around current levels. So maybe there's a pullback to be expected.

But I can't sell this stock, not with these fundamentals and not with the current general market condition. I might lose my position.

So I'll continue holding, expecting much higher prices over the weeks to come.

Those 3 consecutive powerful white marubozus, a pattern called «3 white soldiers» is very bullish indeed. But it would be amazing for the stock to continue moving higher after such huge gains over the short term. People take profits too.

But I won't, not with this technical and fundamental background. Also, not with the current kind of basic conditions on the general market.

TRAD will go higher, not a doubt in my mind.

I like the price action on TRAD, reminds me of NWRE before it took off to new highs, TRAD broke out of its 2 year base on great business metrics report on Nov 2, and if history is any indication I am looking for good numbers come early December to propel the stock higher. Great fundamentals and a growth story that has been under the radar for a while.  And yes those powerful white candles will not go for not. Below is a link to the business metrics history and it sure looks great 

http://www.tradestation.com/aboutus/businessmetrics.shtm

Thanks for your analysis fantazia, I fully agree with it, let me applaud 

It sure reminds NWRE, oh my, I wish I held that stock a little longer ... but I'm learning everyday, and now with the Fast Portfolio the 3 Stocks on Fire Portfolio will probably be able to hold stocks for some more time.

Volume on TRAD is coming down as the stock digests that 3 white soldiers pattern, but soon it will shoot again to new highs. Fundamentals and technicals are working together here, and nobody should stand in the way.

TRAD is just consolidating its recent gains before it makes another powerful white marubozu to new highs.

I said this:

Quote from: David Randolph on November 10, 2005, 09:27:43 AM
TRAD is just consolidating its recent gains before it makes another powerful white marubozu to new highs.

And the stock listened, as you can see on the chart below.

Actually, I think TRAD is the best pick on the 3 Stocks on Fire Portfolio, and I think its share price will at least double over the next 6 months. If I were to play at the 3 Stocks on Fire $1,000 contest this would have been my pick. Well, maybe on the next challenge, next month.

Looking now at the long term chart, I see TRAD is hitting long term resistance now. I believe the stock will cross that resistance level to new all time highs above $16.

QuoteLooking now at the long term chart, I see TRAD is hitting long term resistance now.

The stock crossed the long term resistance like there wasn't any. Now we have the 2003 high at $13.75 and the all time high at $16. I truly believe both these resistance levels will soon be below TRAD, and the stock will see new all time highs, maybe still in 2005.

Fundamentals are just too attractive as you can read below on this thread.

Just a retest to the old long term resistance, now support. Look for the continuation of the strong upward trend.

Does the downgrade that just occured change your view on this David? I am thinking of selling to protect the small profit i have.

Just got stopped out, ah well, made $23 on the trade

To me, nothing has changed between yesterday and today.  This guy probably just wants cheaper shares himself.  I will see where we are at the end of the day, but right now it just appears people are panic selling to me.

Picked up some more shares at 11.50 , could not pass it up, its always best to take adventage when others panic for no reason. I wish I had that kind of power, to yell downgrade and stock drops 10% heheh. Market is its on beast and all you can do is follow what you already know. Earnings and monthly metric #'s are higher substantialy yoy, and with their new lower rates to take effect on December 1 ( as per their latest quarterly release) , this should accelerate growth even more. Lastly not to forget this hole sector that TRAD is in has been hot, and TRAD has traded to strong lately to all of the sudden dive into the abyss for no fundamental reason.

Just my 2cents
Good Luck